SKY AM AGENDA INTERVIEW WITH TOM CONNELL
SUBJECTS: Federal budget, Uighurs & BRI.
TOM CONNELL, HOST: Well phase two of the Government’s income tax cuts will be fast tracked when Treasurer Josh Frydenberg, delivers the delayed budget tomorrow. It does mean that they’re set to start, in fact from July 1, and people will get an increased dividend when they do their next tax return. To talk through this and plenty of budget speculation joining me live now my poli-panel, Liberal MP Andrew Wallace, from the Labor party Peter Khalil. Peter Khalil, just to start with you, the Labor party – it’s decision time now – on the very least phase two, you’ll support this?
PETER KHALIL MP: So on the tax cuts Tom, you’d know we were pretty clear that we supported stage one and stage two. They made a lot of sense, even before the pandemic we wanted to bring them forward, because stage three was basically for the highest income earners, some 6% of all taxpayers, and a lot of the evidence demonstrates that they wouldn’t be spending that money in the economy, and that logic still pertains. Of course, we’re going to have a look at what the Government is putting forward in the context of the entire budget – things have clearly changed since last year – but I think the logic of supporting stage one and stage two particularly, is still there, and I think Jim Chalmers has made some comments around that over the weekend as well and we’ll have more to say.
HOST: So stage three, we’ll see. Andrew Wallace, why is that still the right way to go? This would give a pretty significant win for high income earners, the same flat tax rate from $40,000 up to $200,000. Is that the right priority right now, and a lot of that could be saved is the theory as well?
ANDREW WALLACE MP: Well Tom, the Government believes in putting as much money as they possibly can into the hands and pockets of people who will spend the money, and we make no bones about that. We’re not about more taxes, we’re about less taxes, and we will continue to do that. We believe that the best way to pull us out of this COVID crisis, this economic crisis, is to put more money into people’s pockets.
HOST: Well, let me ask you about the debt and deficit. Expecting $200 billion in terms of the one year deficit, many deficits to come. The debt ceiling $1.1 trillion Andrew Wallace, it’s a massive figure and exponentially higher, many times higher than what Labor were approaching when they were in power, and it was a debt and deficit disaster. Why is it affordable now when it wasn’t then?
WALLACE: Well Chris Richardson from Deloitte Access Economics has spoken very sensibly about this issue and he’s indicated and confirmed that this is the right approach. Interest rates are very, very low at the moment, and this is a time where the Government needs to be investing in things like infrastructure, like its $110 billion infrastructure program, that’ll see another 30,000 jobs for Australians, on top of a hundred thousand jobs we’ve already created for infrastructure projects. Now this is not about pink bats or overpriced school halls, we are about providing vital infrastructure for the country and infrastructure that will be income-producing, it’ll get people home sooner and safer. All the sort of infrastructure that we are crying out for around this country, we’d be bringing that forward in this $110 billion program.
HOST: But the warnings that were coming, that were being issued by, for example the Tony Abbott led Opposition, were about a disaster. The economists at the time, including people such as Chris Richardson, were saying debt to GDP is a key figure, it’s not a disaster. So was that overheated back then? Can you at least say that now?
WALLACE: Well, the debt to GDP ratio under this plan will be around about 55% which is still one of the lowest in the OECD, so it’s manageable, I think. I was listening to a podcast that Chris gave yesterday. He was talking about the increased cost of the Government’s expenditure from an interest perspective is the equivalent of a Bunnings sausage sizzle, per Australian. So it’s manageable, interest rates are very, very low, and this is not a time for the economic faint-hearted. We need to get cracking on infrastructure. We need to ensure that we provide jobs for Australians.
HOST: I know you don’t want to verge into what the previous warnings were from the Coalition at 55% now, I think theirs’ about 15% then. Peter Khalil, is Labor going to criticise the increasing of the debt ceiling?
KHALIL: I feel like I was in the lockup there, just listening to Andrew not being able to comment. Can I just make a couple of points and answer your question as well, Tom? I agree with one thing that Andrew said which is that we should be putting money in the hands of people who are going to spend it; unfortunately they don’t quite understand that. Let’s be very clear about this. Debt has almost tripled under their watch over the past seven years, pre-pandemic. And also, they’ve almost doubled the deficit, pre-pandemic. So this myth about them being good economic managers is just that – a myth. It’s not true on all of the statistical records and the objective facts, and when you’re talking about putting money into the hands of people Andrew, the third stage goes to the richest or the highest earners. The richest people in the community who on the evidence – and you can check the economic evidence – they’re less likely to spend that money in the community, but people on stage two will be spending money. They’re spending that money. And also people who are on JobSeeker and JobKeeper, which you’ve cut, they’re not saving it in a sock under their bed, they’re actually spending the money in the economy in small businesses. So when you cut JobSeeker and JobKeeper, the people that go down to the local cafe to buy a coffee and a muffin with their kids are just going to stop doing that because you’ve cut it during this period. There needs to be more fiscal stimulus during this period. And I’ll give you another example of this Government’s sleight of hand, right? They talk about $1.5 billion for manufacturing – we welcome that – but at the same time they’ve got a bill, a bit of legislation on the books that they want to pass through the Senate, which takes $1.8 billion out of research and development for the same sector. So they’re taking with one hand and giving with the other, and it is a sleight of hand. As always with this Government it’s all smoke and mirrors…
HOST: Well, we’ll see if that turns out to be the case. We can hear from the Prime Minister Scott Morrison where the hint was, that might be dropped, we’ll see. And so until it is, you can make the point, perhaps in hindsight. I want to ask both of you about immigration. What do you think Andrew Wallace, is it a time when we’re going to have actually immigration dip and be a negative – so more people leaving the country than arriving – to take a fresh look at how much we rely on immigration for economic growth at the moment?
WALLACE: I think it’s beyond doubt that a sensible immigration is good for the Australian economy. It’s good for people; every person that arrives into the country is an economic benefit. This is not a matter of one person arriving and taking a job – no immigrants have – and we’re a country of immigrants, hundreds of them. So, I don’t subscribe to that theory that we should be broad-scale winding back immigration. I mean, we have seen a natural drop of immigration prior to COVID, from the highs of around 180,000 a year down to around a high one forty. So immigration has dropped somewhat naturally, and of course with COVID it’s dropped significantly, but those figures will come back again. I don’t see that there’s any need to have a broad-scale change to our immigration policy.
HOST: All right. So supporting, what was it, a reduced cap the government brought in, of course, just noting that. Where do you sit on this Peter?
KHALIL: Well, I agree with Andrew on the fact that we are a nation of migrants and that migration has actually been a key driver of economic growth, I mean that’s just the fact. My criticism of the Government, and particularly Scott Morrison who was Immigration Minister, was that he made a virtue of reducing permanent migration while at the same time – knowing full well that immigrants actually drove economic growth – increased temporary migration. So the balance between the two is skewed towards increases in temporary migration over a period of time, and then he tries to make a virtue of reducing migration, to look like he’s a congestion-buster. The fact is this; in the economic recovery phase for Australia, we need to work this out. We need to sort out a permanent skill-migration program that is akin to what we saw post-World War Two, which was a huge driver. I’m not just about prosperity and economic growth, but our cultural and social growth as a nation. My parents are migrants and they came here in the late sixties, early seventies, worked hard, and built a future for their kids, like millions of other Australians. And that has to happen again for us to get out of this COVID-19 period successfully…
WALLACE: I was just going to jump in and say, that’s all well and good, but the issue of immigration in the immediate term is a problem, because we’ve gone from 140,000 people a year down to almost zero. So this is something that’s not going to change until the COVID crisis has left us, or we’ve got a vaccine.
HOST: Alright. I just want to ask you quickly about this Peter, the CRRC Chinese Rail Company, it’s making trains in Victoria as part of a contract with the Government there. It’s been revealed its recently blacklisted by the U.S. Government due to security risks. The parent company as well, identified as a beneficiary of Uighur labour. Does this show the danger of State Government signing up to the ‘One Belt One Road’ initiative?
KHALIL: Yeah Tom, you know my record on this. I’ve stated publicly, in the media, and in parliament, my support for human rights of the Uighur population, as well as the Hong Kong population and other minorities, who are being exploited – particular the Uighur – who are exploited for forced labour. Also on the record, Federal Labor has been very clear about the fact that we would not support a BRI agreement of this nature. I remember asking about the BRI many, many years ago back in 2017, about what it actually pertains, what benefit pertains to a country that signs up or a state that signs up. And basically the only answer I could get was that the companies in that jurisdiction would be given cheap finance from Chinese banks as a tender for various projects. Well, we know how cheap finance is now, you can get it for next to zero in banks in Europe and so on. So the advantages aren’t really there as I see it in economic sense. But on the question of which jurisdiction should be in control of these types of agreements, certainly the Commonwealth.
WALLACE: Well maybe Peter you should be talking to Daniel Andrews and the Victorian Labor Government…
HOST: Well it was asked in that context, so seemingly he’s agreeing with this. We have to go, Peter, Andrew, we’ll talk again soon. Thanks.